Aker Bp Asa · OSL:AKRBP
Aker Bp Asa — Det norske oljeselskap — Investor Day (January 2016)
72 slides from Aker Bp Asa's investor day presentation, Jan 18, 2016
Slide 1: Capital Markets Day 2016
CAPITAL MARKETS DAY 2016 DET NORSKE OLJESELSKAP January 18, 2016
Slide 2: Disclaimer
Disclaimer This Document includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Document are based on current expectations, estimates and projections about globa
Slide 3: Agenda
CAPITAL MARKETS DAY 2016 Agenda Session 1: 09:00 – 10:30 ■ Corporate Strategy – Karl Johnny Hersvik, Chief Executive Officer ■ Finance – Alexander Krane, Chief Financial Officer ■ Exploration – Gro Gunleiksrud Haatvedt, SVP Exploration ■ Q&A ■ Coffee Break Session 2: 11:00 – 12:15 ■ Development proj
Slide 4: Today's speakers
CAPITAL MARKETS DAY 2016 Today’s speakers Karl Johnny Hersvik, Chief Executive Officer Olav Henriksen, SVP Projects Karl Johnny Hersvik (born 1972) has been CEO of Det norske since May 2014. Prior to joining Det norske, he served Olav Henriksen (born 1956) joined Det norske in January 2015. Prior to
Slide 5: Investment case
CAPITAL MARKETS DAY 2016 Investment case ■ Well positioned in a «lower for longer» oil price environment ■ Strong production base: ~60 mboepd* with production cost below 7 USD/boe* ■ Purely operating on the NCS: Low political risk and attractive fiscal regime ■ Robust and diversified capital structu
Slide 6: Corporate strategy
Corporate strategy Karl Johnny Hersvik Chief Executive Officer 6
Slide 7: A challenging environment that provides opportunities
THE BIG PICTURE A challenging environment that provides opportunities NCS continues to be one of the most attractive Upstream costs have nearly tripled over the last 10 years hydrocarbon regions globally years, similar to oil prices After 45 years of production on the NCS, there are still signific
Slide 8: Utilise current environment to strengthen long-term competitiveness
CORPORATE AMBITION Utilise current environment to strengthen long-term competitiveness Goal to sanction new standalone projects at break-even price below USD 40/bbl 50% reduction in Exploration Maximize the effectiveness of the end-to-end exploration process dry hole costs 50% reduction in Developme
Slide 9: Three building blocks for future success
CORPORATE STRATEGY Three building blocks for future success Execute Improve Grow Be opportunistic and exploit market Ivar Aasen project and drilling Deliver on improvement agenda opportunities Production, projects and drilling on Strengthen improvement capabilities Achieve selective grow
Slide 10: Continue the trend in execution from 2015
CORPORATE STRATEGY Continue the trend in execution from 2015 Execute Improve Grow OCT 14 JAN 15 APR 15 JUL 15 SEP 15 DEC 15 10
Slide 11: Key improvement themes
CORPORATE STRATEGY Key improvement themes Execute Improve Grow Enable G&G process efficiency Exploration Effectiveness Optimize Exploration well drilling methodology Project Develop the next Project delivery model Delivery Capture synergies from Alvheim & Ivar Aasen integration Operations
Slide 12: Visible organic growth from existing portfolio
CORPORATE STRATEGY Visible organic growth from existing portfolio Execute Improve Grow Indicative production profile (mboepd) – net to DETNOR ■ Strong asset base for further growth 160 Sanctioned Unsanctioned ■ Thousands High quality development projects with low break even Alvheim Caterpillar
Slide 13: Building longer-term investment options
CORPORATE STRATEGY Building longer-term investment options Execute Improve Grow Demonstrated ability to acquire NCS assets at attractive prices Svenska and Premier Norge acquisitions < USD 1/boe Added flexibility to project inventory, but without added CAPEX commitments Any acquisitions to b
Slide 14: Year-end 2015 certified P50 reserves of 498 mmboe
COMPANY OVERVIEW Year-end 2015 certified* P50 reserves of 498 mmboe Development in P50 reserves (mmboe) Proven & probable reserves (P50), end 2015 500 Other; 1 450 Alvheim; 79 400 Vilje; 8 350 Volund; 19 300 61% CAGR from 498 Bøyla; 11 250 2006 to 2015 200 mmboe 150 Ivar Johan Aasen/Hanz; 71 Sverdru
Slide 15: Reserves development since Marathon Oil Norge AS acquisition
COMPANY OVERVIEW Reserves development since Marathon Oil Norge AS acquisition Development P50 reserves (mmboe) 2013 - 2015 ■ Reserve replacement of 7.5x since the acquisition of Marathon 303 498 Oil Norge AS ■ Johan Sverdrup ■ Alvheim area IOR efforts ■ Ivar Aasen ■ Reserve replacement of 0.85x (ex.
Slide 16: Year-end 2015 mean contingent resources 326 mmboe
COMPANY OVERVIEW Year-end 2015 mean contingent resources* 326 mmboe Garantiana Alvheim area 34 25 Krafla/Askja 90 326 97 North of Alvheim** mmboe 27 52 Gohta Vette/Mackrel Includes categories 4 and 5 according to NPD’s classification system * Company estimates **Including Storklakken, Frøy and Fri
Slide 17: Finance
Finance Alexander Krane Chief Financial Officer 17
Slide 18: Det norske's financial strengths
FINANCE Det norske’s financial strengths Prudent hedging policies to High margin production with protect downside low operating costs Financial risk Operating management cash flow USD 1.3 billion in undrawn Liquidity Taxes Tax credits shield ~90% of debt facilities field investments Debt capital Own
Slide 19: High margin production with low operating cost
FINANCE High margin production with low operating cost Pro-forma (unaudited) DETNOR and Marathon Oil Norge AS Excellent uptime and reliability record on Alvheim FPSO Production efficiency of 94.2 percent in 2015 Production 87 93 84 (mboepd) 67 60 Low production costs combined with a pricing pr
Slide 20: Fiscal regime supportive of growth
FINANCE Fiscal regime supportive of growth Field development example Estimated tax for 2015 (NOKbn) 2,2 Year 1 2 3 4 5 6 SUM Estimated tax receivable of NOK 1.6 bn Investment -100.0 Q2’16 0,7 Tax depreciation (6 yrs) +13.0 +13.0 +13.0 +13.0 +13.0 +13.0 +78.0 1,1 Uplift (4 yrs) +2.9 +2.9 +2.9 +2.9 +1
Slide 21: Strong banking relationships and long-term debt maturities
FINANCE Strong banking relationships and long-term debt maturities Cost efficient, long-term diversified capital structure with no debt 2016 2017 2018 2019 2020 2021 2022 maturities until after expected first oil at Johan Sverdrup USD 3,000* million RBL 3m LIBOR + 300-325bp** Debt facilities in
Slide 22: Strong liquidity position and diversified capital structure
FINANCE Strong liquidity position and diversified capital structure USD 3,000* million RBL 1 000 (Secured, 1st lien) 2 170 730 uncommitted Total bank facilities and bonds accordion option USD 550 million RCF 550 (Secured, 2nd lien) 1,3 NOK 1,900 million bond Utilized USD 255 (Senior unsecured) Undra
Slide 23: Financial covenants
FINANCE Financial covenants Historical covenant calculation Debt instrument Main covenants 4,0x 3,5x • Reserve-based lending facility 3,0x • Leverage ratio < 3.5x • Revolving credit facility Leverage • Interest cover ratio > 3.5x • DETNOR02 ratio 2,0x 1,3x 1,6x 1,0x 1,1x • DETNOR03 (subordinated) •
Slide 24: Prudent financial risk management policies
FINANCE Prudent financial risk management policies Hedging Overview of current hedges ■ Various hedging agreements for commodities and FX to mitigate 2016 2017 2018 2019 financial risk when pricing and levels are viewed as attractive Foreign exchange hedges % hedged of total 55% 50% 33% 15% NOK expo
Slide 25: 2016 guidance
FINANCE 2016 guidance Item Guidance 2016 CAPEX USD 925 – 975 million 2016 EXPEX USD 160 – 170 million 2016 Production cost USD 8 – 9 per boe* 2016 production 55 – 60 mboepd Based on USD/NOK 8.8 * From 2016, production cost will include shipping & handling cost, budgeted at USD 1.2 per bbl after Det
Slide 26: 2016 Investment budget of USD 925-975 million
FINANCE 2016 Investment budget of USD 925 – 975 million Ivar Aasen Drilling of production wells and water injector wells Johan Sverdrup Construction and installation of topside ~40% Alvheim area Other Drilling activities BoaKamNorth, Viper-Kobra and Volund ~5% West infill Subsea installa
Slide 27: Ivar Aasen CAPEX guidance (life of field)
FINANCE Ivar Aasen CAPEX guidance (life of field) Project progressing well and within budget USD billion (gross) 0,1 At constant FX, current full field CAPEX estimate is in line with the PDO estimate 0,8 Full field CAPEX has come down by 15 percent in USD-terms 0,9 CAPEX after first oil Abou
Slide 28: Exploration
Exploration Gro Gunleiksrud Haatvedt SVP Exploration 28
Slide 29: By 2020: A leading explorer on the Norwegian Continental Shelf
EXPLORATION AMBITION By 2020: A leading explorer on the Norwegian Continental Shelf ■ Ensure long term reserve replacement and value creation ■ Establish new core areas ■ Discover 150 mmboe net to Det norske in 2016 - 2020 2016-2020 ■ Continuous positioning for significant additional discoveries ■ I
Slide 30: Strategic direction
Barents Sea EXPLORATION STRATEGY SE Barents Loppa North Strategic direction Loppa South ■ Oil primary target, secondary wet gas with large volume potential ■ Timely ILX within core areas ■ Regional projects for identifying new growth areas ■ Secure operatorship Norwegian Sea NE ■ North Sea Norwegian
Slide 31: Drilling schedule 2016
Barents Sea EXPLORATION Drilling schedule 2016 Filicudi ■ North Sea: Core area development ■ Drill ILX prospect near Ivar Aasen field ■ Confirm volumes in Askja/Krafla area ■ Explore upsides near Garantiana discovery ■ Barents Sea: From volume to value Norwegian Sea ■ Explore for volumes to establis
Slide 32: Rovarkula – Extending the Utsira core area
PL626 (50%, OPERATOR) – NORTH SEA Rovarkula Rovarkula – Extending the Utsira core area Operated exploration well close to infrastructure ■ Upside potential, side track if positive results Alvheim ■ Possible tie-in of Rovarkula to Ivar Aasen with Hanz production start 2022 PL626 Ivar Aasen ■ West Cab
Slide 33: Askja/Krafla – a potential new core area
PL035C AND PL272 (50%, PARTNER) – NORTH SEA Askja/Krafla – a potential new core area Drilling campaign 2016 ■ 4 vertical wells ■ Several optional side tracks ■ Aiming at proving up the main resource potential in the area ■ Gross proven resources: 140 – 220 mmboe* Prospects to be drilled in 2016 Opti
Slide 34: Tampen: Unlocking the potential
PL554 (30%, PARTNER) / PL748 (30%, OPERATOR) / PL790 (30%, OPERATOR) – NORTH SEA Tampen: Unlocking the potential ■ Segmented area ■ Uptonia exploration well currently drilling Zeta Raudåsen Beta Knarr Snorre ■ Proven Garantiana volumes: 63 - 165 mmboe* Uptonia well Knarr ■ Potential exploration well
Slide 35: Loppa South – building core area
PL533 (20%, PARTNER) – BARENTS SEA Loppa South – building core area ■ Filicudi prospect to be drilled in 2016 ■ Testing the prospective trend, analogue to Johan Castberg ■ Opening for more opportunities if successful Filicudi prospect 35
Slide 36: Greater Alvheim area
FROM R&D TO EXPLORATION TO PRODUCTION Frigg Greater Alvheim area ILX: High equity tie-in to Alvheim ■ Technical limit seismic reprocessing ■ Massive 3D reprocessing project with improved resolution Frøy and imaging ■ Consistent seismic data set over the Greater Alvheim area Vilje ■ Identify new pros
Slide 37: The HydroKARBON project
EXCLUSIVE R&D ON BARENTS SEA PETROLEUM SYSTEM The HydroKARBON project Direct influence on Exploration decisions ■ Extensive field work on the source rock potential of the Paleozoic succession on Svalbard ■ Tested oil sample in one well from Svalbard together with NPD, proving Paleozoic origin of the
Slide 38: Reduce exploration costs and increase quality
KEY IMPROVEMENT INITIATIVES Reduce exploration costs and increase quality Exploration G&G process Enable G&G process efficiency through multiple initiatives: Effectiveness efficiency - Improving formal and informal exploration processes - Improving strategic long term planning and prioritization i
Slide 39: Development projects
Development projects Olav Henriksen SVP Projects 41
Slide 40: Project inventory provides flexibility
DEVELOPMENT PROJECTS Project inventory provides flexibility Plateau DETNOR Gross Estimated Project production Equity mmboe first oil (gross) BoaKamNorth 62.4% 10 ~9 mboepd 2016 Ivar Aasen 34.8% 186 ~67 mboepd 2016 Viper-Kobra 65.0% 8 ~8 mboepd 2016 Gina Krog 3.3% 216 ~67 mboepd 2017 Volund infills 6
Slide 41: Asset profile: Greater Alvheim area
GREATER ALVHEIM AREA Asset profile Operated, ~65%* working interest Production from the Alvheim field started in June 2008 Oil is transported from the field with a shuttle tanker, and associated gas is exported to Scotland Additional resources added with subsea tie-in from Vilje (first oil 200
Slide 42: Next projects in the Alvheim area
GREATER ALVHEIM AREA Next projects in the Alvheim area Planning for the next projects Illustrative timing of new wells in the Alvheim area Secured rig capacity for wells after Viper/Kobra 2016 2017 2018 2019 Transocean Artic with commencement in December 2016 Drilling BoaKamNorth Options to ex
Slide 43: Asset profile: Ivar Aasen and Hanz
IVAR AASEN AND HANZ Asset profile Operated, ~35%* working interest Area map PDO for Ivar Aasen was approved on May 21, 2013 Gross P50 reserves of 204 mmboe Production of ~67,000 boepd at plateau Final processing and export of oil and gas at the Edvard Grieg platform Oil export to Sture via
Slide 44: Health, safety and the environment comes first
IVAR AASEN Health, safety and the environment comes first ■ Our commitment and that of our partners: ■ Zero HSE incidents ■ Engaged and committed leadership ■ Work actively with HSE ■ Open and honest culture ■ The right to stop unsafe work ■ Responsibility and authority to intervene ■ Respect rules
Slide 45: On track to secure first oil Q4 2016
IVAR AASEN On track to secure first oil Q4 2016 JAN 15 APR 15 MAY 15 JUN 15 JUL 15 AUG 15 SEP 15 OCT 15 NOV 15 DEC 15 47
Slide 46: Upcoming milestones
IVAR AASEN Upcoming milestones Safe Zephyrus JAN 16 MAR 16 MAY 16 JUL 16 SEP 16 NOV 16 DEC 16 48
Slide 47: Jacket installed on the field last summer
IVAR AASEN Jacket installed on the field last summer ■ The steel jacket was constructed by Saipem on Sardinia, Italy ■ The jacket was lifted in place on the seabed 112 meters below sea level on 10 June ■ Piling and grouting activities were concluded and the jacket installation finished in mid July 4
Slide 48: Subsea, Umbilical, Riser and Flowline (SURF)
IVAR AASEN Subsea, Umbilical, Riser and Flowline (SURF) SURF scope on track ■ 2015 scope completed ■ Installation of three pipelines between Ivar Aasen and Edvard Gried were completed in September ■ Rock dumping on pipeline for Ivar Aasen ■ Metrology, pre-commissioning and trenching are completed ■
Slide 49: Excellent Drilling Performance
IVAR AASEN Excellent Drilling Performance Meters/dry hole day (ex. core&log) by well* Initiated drilling of production wells through jacket in mid-July Development wells between 2010 and 2015 on the NCS, targeting conventional ■ Batch set five conductors hydrocarbons (ex. HPHT, multilateral wells,
Slide 50: Topside at 92.5% completion
IVAR AASEN Topside at 92.5% completion Minimizing offshore hook-up & commissioning scope ■ Integrated Design Review to verify the design ■ Timely delivery of EICT inputs to Construction and Commissioning ■ Close cooperation in integrated team with Det norske and contractors ■ Construction and Commis
Slide 51: Make platform ready for first oil
IVAR AASEN Make platform ready for first oil Completion ■ Aibel hired and mobilized as hook-up contractor ■ Integrated team – Det norske, Aibel people in Singapore ■ 450 bed Floatel to accommodate offshore work force ■ Ivar Aasen readiness team established with mandate to secure 1st oil Q4 2016 ■
Slide 52: Asset profile: Johan Sverdrup
JOHAN SVERDRUP Asset profile Partner, 11.5733 % working interest Johan Sverdrup is one of the largest fields on the NCS PDO for Johan Sverdrup phase 1 was approved on August 21 Recoverable reserves of 1.7-3.0 billion boe ~80% to be extracted from first phase investments Production to reach
Slide 53: Project progressing as planned
JOHAN SVERDRUP Project progressing as planned Most major contracts have been awarded Cost estimates continue to come down Phase 1 CAPEX (Operator’s latest estimate) reduced from NOK 123 billion (nom.) at PDO to NOK 108.5 billion (nom.)* Operator’s Phase 1 indicative FX split on CAPEX NOK ~20
Slide 54: Full field development
JOHAN SVERDRUP Full field development Planned milestones Concept selection / DG2 Q4 2016 Development plan Q4 2017 Production start-up 2022 Developing the periphery of the field Additional wells Additional subsea installations and/or unmanned wellhead platforms Increase process capaci
Slide 55: Asset profile: Gina Krog
GINA KROG Asset profile Partner, ~3.3% working interest Area map Located about 30km northwest of Slepiner, and will be developed to the Sleipner field PDO approved in 2013, first oil expected in 2017 Field is developed with a platform resting on the seabed, while the wells will be drilled with
Slide 56: Asset profile: Vette
VETTE Asset profile Operated, ~50% working interest Area map Discovered in 1972 and appraised in 2009 Three development concepts being evaluated: Use of jack up drilling rig with production facilies Subsea wells connected up to a FPSO Wellhead platform with processing capability Deadline
Slide 57: Developing a new project delivery model
KEY IMPROVEMENT INITIATIVES Developing a new project delivery model Exploration Effectiveness Project delivery Establish a new project delivery model including: Project model - Developing a new project model covering tie-back, subsea Delivery and development projects - Securing front end loading a
Slide 58: Producing assets
Producing assets Geir Solli SVP Operations 60
Slide 59: Strong HSE performance
GREATER ALVHEIM AREA Strong HSE performance ■ There were no serious incidents in 2015: ■ No serious personnel injuries ■ No acute spills to the environment ■ No incidents with high potential ■ Experienced personnel and a mature organization at Alvheim contribute to good HSE results ■ Several initiat
Slide 60: The Alvheim story - exploration
GREATER ALVHEIM AREA The Alvheim story - exploration Area consolidation 2001-2002 ■ Known hydrocarbon presence but complex mixture of licenses and owners ■ Resource potential commercial only with an area development approach Boa Kameleon ■ Area extended over 3 licenses - Reduced number of owners fro
Slide 61: The Alvheim story - development
GREATER ALVHEIM AREA The Alvheim story - development Fast track development of an Area Oil Hub ■ Q4 2003 Concept Selection based on converting the “MST Odin” to an FPSO ■ Q3 2004 Alvheim and Vilje PDOs submitted ■ 2005 Hull conversion at Keppel Shipyard in Singapore ■ 2006 - 2007 Topsides and Integr
Slide 62: The Alvheim FPSO
GREATER ALVHEIM AREA The Alvheim FPSO 64
Slide 63: Status January 2016
Status January 2016 Sanctioned 65
Slide 64: The Alvheim FPSO production and Alvheim area reserves
GREATER ALVHEIM AREA The Alvheim FPSO production and Alvheim area reserves Alvheim FPSO historical production (mboepd gross) Reserves vs. PDO (P50 gross), mmboe 400 160 350 140 Remaining reserves 300 120 Arresting Produced to end 2015 decline +97% Reserves at PDO 250 100 200 80 60 150 40 100 +59% +7
Slide 65: Excellent uptime and reliability record
GREATER ALVHEIM AREA Excellent uptime and reliability record Alvheim Area Alvheim FPSO Mid-life Detnorske operated FPSO currently producing ~100 mboepd (gross) ~310 million barrels of oil (gross) produced to date Strong operational performance, with a well embedded continuous improvement cultu
Slide 66: Way forward
GREATER ALVHEIM AREA Way forward Secure continuous development to fill the FPSO Further area infill drilling Development of further small discoveries in the area e.g. Caterpillar, Storklakken, Gekko Near infrastructure exploration High focus on subsurface maturation to maximize recovery wi
Slide 67: Operational readiness
IVAR AASEN Operational readiness Status update Ivar Aasen and Edvard Grieg Ivar Aasen readiness team established One overall integrated team securing effective planning, execution and start-up Q4 2016 Asset based operation and fully integrated technical support for the Alvheim and Ivar Aasen a
Slide 68: Optimize Alvheim and transfer knowledge to Ivar Aasen
KEY IMPROVEMENT INITIATIVES Optimize Alvheim and transfer knowledge to Ivar Aasen Alvheim & Ivar Capture synergies across assets by: Exploration Aasen integration - Implementing common work processes Effectiveness - Sharing technical support and services - Implementing efficient area emergency sol
Slide 69: Concluding remarks
Concluding remarks Karl Johnny Hersvik Chief Executive Officer 71
Slide 70: Three building blocks for future success
CORPORATE STRATEGY Three building blocks for future success Execute Improve Grow Be opportunistic and exploit market Ivar Aasen project and drilling Deliver on improvement agenda opportunities Production, projects and drilling on Strengthen improvement capabilities Achieve selective grow
Slide 71: Concluding remarks
CAPITAL MARKETS DAY 2016 Concluding remarks ■ Strong current production base and operational cash flow ■ World-class project portfolio with low break even oil price levels ■ Identified potential within the portfolio to lift oil & gas production to 160,000 boepd after 2020 in improved market conditio
Slide 72: Det norske
EF TNORSKE www.detnor.no